Newmont 3Q24 Earnings Call Highlights

Newmont (ASX: NEM) shares have dipped almost 15% in the past two sessions after its first-quarter 2025 earnings missed analyst expectations, driven by higher than expected costs and persistent labour inflation.

First Quarter 2025 Earnings Summary

• Net income of US$922m (1Q24: US$351m)

• Net income per share up 102% to US$0.81 but below US$0.86 consensus

• Average realised gold price of US$2,518/oz (1Q24: US$1,906)

• All-in sustaining costs of US$1,611/oz (1Q24: US$1,376) compared to market expectations of US$1,445/oz

• Lihir, Cerro Negro and Akyem were the main drivers of higher costs

• December quarter guidance implies significantly lower cost expectations and an increase in buyback program to US$3 billion in total

Earnings Call Highlights

The below topics have been answered by CEO Tom Palmer, COO Natascha Viljoen and Executive Vice President Karyn Ovelmen.

2025 production outlook: "Looking ahead to 2025, we expect gold production next year from Lihir will be largely consistent with this year and around 250,000 ounces lower than our initial guidance for 2025 that we provided back in February."

Cost outlook: "All-in sustaining costs for the fourth quarter are expected to be approximately US$1,475 an ounce, which represents an 8% reduction compared to the third quarter."

Cost drivers: "Increased production taxes and royalties from the higher gold price environment and slightly higher G&A spend, largely due to an increase in contracted labor."

Synergy realisation: "When we announced our decision to acquire Newcrest, we committed to delivering $500 million in synergies from three areas: G&A, supply chain, and our Full Potential program. And as of today, we have achieved that $500 million synergy run rate."

Divestment progress: "Our non-core divestment program has advanced meaningfully, with the two recently announced transactions expected to deliver up to $1.5 billion in combined gross proceeds."

Debt position: "We purchased $233 million in nominal debt ... To date, we've now retired nearly $500 million for the year. We ended the quarter with $7.1 billion in total liquidity. And our gross debt now stands at $8.5 billion compared to our target of $8 billion."

Buyback progress: "Since our last earnings call, we repurchased 9.4 million shares at an average price of US$53.16 per share for a total cost of $500 million. Newmont’s board authorized an additional $2 billion share repurchase program, bringing our total authorization to $3 billion."

Analyst Q&A Highlights

Is it realistic to expect unit costs to moderate over time or should we assume inflation is the best-case scenario: "So if you look forward, if gold price eases, you'd expect the cost of producing an ounce to ease... We have 11 managed operations going forward where we're going to be in a position to be looking over the long term and then strengthening and growing those margins."

Inflation trends: "It's the labor costs where we're seeing that escalation, particularly the contracted labor ..."

Cost drivers: "Largely what you're seeing is the costs we're seeing this year for labor, whether it be employees or contractor labor, staying about the same going into next year, and the driver is lower volume and the sustaining capital."

Are synergies fully reflected in Q3 numbers, given the 7% QoQ increase in opex: "Key driver that's going to flow through in the fourth quarter is a very strong gold production quarter... So that's what you're going to see drive that improvement in the fourth quarter."